Health care ruling: What it means for you

June 29, 2012|ANDREA COOMBES | MCT Newspapers

SAN FRANCISCO — The Supreme Court’s ruling Thursday to uphold the bulk of the health care law — the biggest overhaul of the health care system since Medicarewas created in 1965 — means that some popular provisions, such as requiring insurers to accept people regardless of pre-existing conditions and to accept children up to age 26 on parents’ plans — remain intact.

The ruling delivers a huge victory to President Barack Obama on the signature law of his presidency — a law that promises to make insurance available to a good number of the 49 million Americans who are currently uninsured.

Some say the law means higher costs ahead.

"The end result is everybody’s happy because everybody can get health insurance, (but) who’s going to pay for it? That’s the big question," said Keith McCurdy, a New York-based partner with law firm Fox Rothschild, which works with employers on their benefits plans.

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"In the past year, insurance premiums went up to begin covering some of the requirements of health care reform. As more of those requirements develop, the cost of insurance will continue to go up," he said.

But others disagree. "Health care costs have been rising for many years — that hasn’t been all that different in recent years," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation, a nonprofit, nonpartisan think tank.

She said the law’s reforms aimed at curbing costs are still to come. For instance, insurance companies currently compete "on the basis of their ability to select out the healthiest customers and profit off them as much as possible," Pollitz said.

But the law will force them to compete on value, she said, helping to bring costs down. How will the law do that? In part, by requiring insurers to cover people regardless of pre-existing conditions and requiring minimum standards for what policies cover, plus much greater disclosure to consumers about what they’re paying for.

The law’s reforms are "a new factor in the health care marketplace that we don’t have today that will curb health care costs," she said. Plus, she added, "A lot of why health care costs go up is because we can do more things. People don’t die of stuff that used to take us out a generation ago."

The law "frees many Americans from simply having employer provided coverage as their only choice," said Randall Abbott, senior consulting leader at Towers Watson, a benefits consulting firm.

The insurance exchanges, coming in 2014, combined with the law’s requirement that all comers be covered, regardless of pre-existing conditions, is good news for people who retire before being eligible for Medicare, among others who don’t have insurance currently, he said.

But "the economic considerations of whether or not the nation can afford it over the long term is something we now need to grapple with from a budget perspective," he said.

Part of those costs will be paid through higher tax rates slated to start in 2013 for some high-income people: a 3.8 percent tax on some investment income and a 0.9 percent increase in payroll taxes for single filers with income of more than about $200,000 and married couples earning more than $250,000.

Republicans have vowed to repeal the entire law, though their ability to do so may depend on the outcome of the elections this fall.

A popular provision in the law mandates that children up to age 26 must be allowed access to insurance via their parents' plan. That provision appears to be unchanged by the court’s ruling. And some preventive-care services will become available at no cost.

The $1.3 billion in rebates to consumers as a result of a provision in the health law also appear likely to move forward as expected.

Small-business owners will continue to get access to the tax credit aimed at helping to subsidize the cost of health insurance for their employees. And tanning-salon owners across the land may be complaining that the 10 percent surtax on such services will continue.

The health law limits the items covered by the pretax flexible-spending accounts people tap to pay for medical expenses — requiring a doctor’s prescription for more items — and, starting in 2013, the law will make it more difficult for some taxpayers to deduct medical expenses (hiking the threshold from 7.5 percent of adjusted gross income to 10 percent).

There’s also a tax hike, slated to start in 2018, on the value of employer-based health insurance plans that are deemed more generous than most, so-called "Cadillac" plans.

The recent push, driven by the new law, toward "accountable care organizations" — a system of delivering health care that includes a focus on patient outcomes — likely will continue.